Appendix — Salorio v. Glaser

‘@upreme Court, U. i;

LED

Ix THE JUN 28 1980

Supreme Court of the United tates

A ,

Octroser TERM, 1980 EL RODAK, JR.. CLERR

——¥9-9(26

JOHN SALORIO, ROBERT COE and

JOHN D. McGARR, JR.,

Appellants,

v.

SIDNEY GLASER, Director of the Division of Taxation,

Department of the Treasury of the State of New Jersey,

Appellee.

On Appeal from the Supreme Court of New Jersey

JURISDICTIONAL STATEMENT

Max GITTER,

345 Park Avenue,

New York, New York 10154.

(212) 644-8000

Avrian M. Fo tey, JR.,

Gateway I,

Newark, New Jersey 07102.

(201) 643-2060

Counsel for Appellants

Of Counsel:

Mark C. Moran,

Suzanne L. Stone,

Pavut, Weiss, RirKrnp,

Wauarton & Garrison,

New York, New York.

Kevin J. CoaK ey,

ConnELL Fotry & GeIsEr,

Newark, New Jersey.

June 23, 1980

Adams Press Corp., 5 Commerce Street, Newark, N. J. 07102—(201) 623-8611

TABLE OF CONTENTS

Opinions BELOW .....-- a zs

JURISDICTION

STATUTORY AND CONSTITUTIONAL Provisions INVOLVED

QuESTIONS PRESENTED sinensis

STATEMENT OF THE CASE ..........-.-------ceceeeeeeeeeee

I—The Federal Questions are Substantial -...............

A. There is an urgent need for the Court prompt-

ly to enforce the mandate of Austin v. New

Hampshire, 420 U.S. 656 (1975), and to vin-

dicate appellants’ rights under the Privileges

amd Yanmmumitios ClmGQ6 osiiccecsvcccccesncicctesemtnents

B. The New Jersey Commuter Income T'ax vio-

lates appellants’ rights under the Equal Pro-

Se TINO ssccincscccnntientn

II—The Judgment Below Is “Final” Under Cox

Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975)

ts) ene Me Re br Mba eer Bias.

APPENDICES (separately bound):

A—Opinion of the New Jersey Supreme Court

B—Opinion of the New Jersey Superior Court,

Chancery Division ...........

C—The New Jersey Emergency Transportation

Tax (Commuter Income Tax), 54 N.J. Stat.

Ann. §§ 8A-1—8A-57

D—Notice of Appeal pat

39a

62a

137a

PAGE

TABLE OF AUTHORITIES

Cases:

American Export Lines, Inc. v. Alvez, 48 U.S.L.W.

I cmealepsiianleiamiaaabhn 18

Austin v. New Hampshire, 420 U.S. 656 (1975) .... passim

Brady v. Maryland, 373 U.S. 83 (1963) ........................ 19

Califano v. Goldfarb, 430 U.S. 199 (1977) .......22..2.... 14

Carondelet Canal & Navigation Co. v. Louisiana, 233

a aniegneicieienseneeineie 19

Cox Broadcasting Corp. v. Cohn, 420 U.S. 469

sc casiidecsdniacissabineeinginspacenaesieenaees 3, 15-18

Forgay v. Conrad, 47 U.S. (6 How.) 201 (1848) ........ 19

Gillespie v. United States Steel silted 379 U.S. 148

| ssdsitasiiiai laa baipiidasgamaaiieaks 18

Hicklin v. Orbeck, 437 U.S. 518 (1978) taal 12, 14, 15, 17

Local No. 438 Construction and General Laborers’

Union v. Curry, 371 U.S. 542 (1963) .................c.s-20+ 17

Mercantile National Bank of Langdeau, 371 U.S. 555

ir ssid nccascehaeneg hacen hanniimidubabtoncedaetostens 17

Miami Herald Publishing Co. v. Tornillo, 418 U.S.

canada enidbasinbahenctioddienesasnintinh 17

Mills v. Alabama, 384 U.S. 214 (1966) ......................... 16, 17

National Socialist Party of American v, Village of

EE MP, WD CLOT E) eccesszecensescnnsucssensnnossetssnccssts 17

Nebraska Press Association v. Stuart, 423 U.S. 1327

Ta discal aontccrtoniicanntinicaseataininenceuiaamevimentinicetes 17

New York v. Cathedral tee 434 U.S. 125

re htt icicegntiioespltn iii dastaiaieniiinheatnpanons 16,18

PAGE

New York v. New Jersey, 429 U.S. 810 (1976) ............ 10

Pennsylvania v. New Jersey, 426 U.S. 660 (1976) .... 10

Radio Station WOW, Ine. v. Johnson, 326 U.S. 120

EPL -<<casbshiehaloninncphaieculinaanascannicalntaleteiagitaiiplabicchassetinentidadiea 19

Shapiro v. Thompson, 394 U.S. 618 (1969) 0.0.0.2... 15

Toomer v. Witsell, 334 U.S, 385 (1948) ............0...... 12

Ward v. Maryland, 79 U.S. (12 Wall.) 418 (1870) ...... 15

Articles:

Note, The Finality Rule for Supreme Court Review

of State Court Orders, 91 Harv. L. Rev. 1004

CRAIN > <A sniinsidsatadainhasiisetenestteabipnineiaimaancbisenngeeteonanianapis 15,18

Day, Taxing Interstate Commuters: A New Jersey

Experiment Under the United States Constitution,

TB SENIORS Ee, BOG. 1 CEIGB) eccescsnnscsccscccecesntsnsntesovonsinss 6

Redish, The Pragmatic Approach to Appealability in

the Federal Courts, 75 Colum. L. Rev. 89 (1975) .. 18

Constitutional Provisions, Statutes and Regulations:

Oe SG as sestcccinsciechadabenecadanied epg darsomunddanaasuceons 3, 19

Die Cs BE. BF: 5. By oi © eters ten eroensicis 3

U.S. Const., Amend. XIV, $1 ...... ™ : . 3,13

54 N.J. Stat. Ann. §§ 8A-1—SA-57 (West) (Supp.

ROVE. sntniscceiieiasniaissniaciipeenhvainsinaaetieignnnheasaaaieeis 2, 4-6

N.Y. Tax Law § 602 (McKinney) (1978) .................... 5

1 N.J. Tax Reporter (CCH) §§ 18-301, 305 20... 6

IN THE

Supreme Court of the United States

Octoser TERM, 1980

No.

«+

JOHN SALORIO, ROBERT COE and

JOHN D. McGARR, JR.,

Appellants,

Vv.

SIDNEY GLASER, Director of the Division of Taxation,

Department of the Treasury of the State of New Jersey,

Appellee.

On Appeal from the Supreme Court of New Jersey

=

_>-

JURISDICTIONAL STATEMENT

Appellants appeal from the judgment of the Supreme

Court of New Jersey entered on March 26, 1980, and

submit this statement to show that substantial federal

questions are presented and that the Supreme Court has

jurisdiction of the appeal.

Opinions Below

The opinion of the New Jersey Supreme Court is

printed in Appendix A* hereto, p. la. It has not yet been

reported. The opinion of the court of first instance

(New Jersey Superior Court, Chancery Division) is

printed in Appendix B hereto, p. 39a. It has not been

reported.

Jurisdiction

Appellants filed this action in June 1977, in the Superior

Court of New Jersey, Chancery Division, to declare un-

constitutional the New Jersey Emergency Transportation

Tax, also known as the Commuter Income Tax, 54 N.J.

Stat. Ann. §§ 8A-1—SA-57 (West) (Supp. 1979), on the

grounds that the tax is repugnant to the Privileges and

Immunities and Equal Protection Clauses of the Consti-

tution of the United States.

The New Jersey tax, appellants argued, is identical

in structure, operation, and discriminatory effect with the

commuter income tax struck down in Austin v. New Hamp-

shire, 420 U.S. 656 (1975). Nevertheless, on October 24,

1978, the New Jersey Superior Court granted summary

judgment to defendant and declared the tax constitutional.

On appeal to the New Jersey Supreme Court, that court,

in a judgment entered on March 26, 1980, held that the

Commuter Income Tax does not violate the Equal Pro-

tection Clause. As to appellants’ claim under the Privi-

leges and Immunities Clause, the New Jersey Supreme

Court remanded for a further evidentiary hearing. The

Notice of Appeal was filed in that court on June 19, 1980.

Appendix D, p. 137a.

* Appendices A, B, C, and D to this jurisdictional statement are

separately bound.

3

Jurisdiction of this Court is invoked under 28 U.S.C.

§ 1257(2). Although the New Jersey Supreme Court in

part remanded the ease, the judgment below is “final”

within the meaning of 28 U.S.C. § 1257, under Cox Broad-

casting Corp. v. Cohn, 420 U.S. 469 (1975), as discussed

more fully fra, pp. 15-19.

Statutory and Constitutional Provisions Involved

New Jersey Emergency Transportation Tax (Commuter

Income Tax), 54 NJ. Stat. Ann. §§8A-1-8A-57 (West)

(Supp. 1979).

Reprinted in Appendix C to this Jurisdictional State-

ment, p. 62a.

U.S. Const., Art. IV, § 2, cl. 1

“The Citizens of each State shall be entitled to

all Privileges and Immunities of Citizens in the

several States.”

U.S. Const., Amend, XIV, § 1

“No State shall... deny to any person within

its jurisdiction the equal protection of the laws.”

Questions Presented

1. Does a New Jersey statute which taxes income of

New York residents earned in New Jersey at a rate of

up to 15%, while at the same time imposing either no

tax whatsoever, or a tax not exceeding 214%, on the in-

come of New Jersey residents earned in New Jersey, vio-

late the Privileges and Immunities Clause of Article IV,

Section 2, Clause 1 of the United States Constitution?

4

2. Does a New Jersey statute which taxes income of

New York residents earned in New Jersey at a rate of

up to 15%, while at the same time imposing either no

tax whatsoever, or a tax not exceeding 214%, on the in-

come of New Jersey residents earned in New Jersey,

violate the Equal Protection Clause of the Fourteenth

Amendment to the United States Constitution?

Statement of the Case

Appellants are three citizens and residents of the State

of New York who work or who have worked in the State

of New Jersey and who therefore have been subject to

New Jersey’s Commuter Income Tax.

Pursuant to the Commuter Income Tax, first enacted

in 1961, New Jersey has taxed New York residents who

derive income in or from the State of New Jersey at

rates that range from 2% to 15% of taxable income.

New Jersey residents, however, paid no income tax what-

soever on their income derived from New Jersey until

July 1, 1976, and since that date they have paid income

taxes of 2% to 214%, under a separate tax called the

New Jersey Gross Income Tax.*

The New Jersey Commuter Income Tax on New York

residents is, and has been since its inception, identical in

all significant respects with the New York State income

tax. For example, the rate table for the Commuter In-

come Tax is a carbon copy of the rate table for New

York’s income tax as set out in the New York statute

* New Yorkers working in New Jersey, who are subject to the

Gross Income Tax as well as the Commuter Income Tax, are re-

quired to pay whichever tax results in the higher levy.

books.* Not only are the tax rates and structures of

the two taxes identical, but each time New York has

amended its income tax statute in any significant respect,

New Jersey has shortly thereafter enacted an identical

change.

By it terms, the Commuter Income Tax is imposed

(a) upon residents of New Jersey on their income

earned in another “critical area state” and (b) upon

all income—including rents, capital gains, and so forth—

derived from New Jersey by persons who are not resi-

dents of New Jersey but who reside in a “critical area

state.” 54 N.J. Stat. Ann. § 8A-2 (West) (Supp. 1979).

A “critical area state” is one bordering on New Jersey

as to which the State Highway Commissioner has certi-

fied that there exists a “critical transportation problem”

relating to commutation between New Jersey and the

bordering state. 54 N.J. Stat. Ann. § 8A-5 (West) (Supp.

1979).

The only “critical area” which has ever been certified

is the New York-New Jersey border. Therefore, resi-

dents of New York who work in New Jersey and New

Jersey residents who work in New York are theoretically

subject to the Commuter Income Tax.

In practice, however, only New York residents are sub-

ject to the tax. The statute provides to New Jersey resi-

dents working in New York a eredit against the Com-

muter Income Tax for income taxes which they pay to

New York. 54 N.J. Stat. Ann. § 8A-16 (West) (Supp.

1979). Sinee New York’s income tax is identical in rate

with the Commuter Income Tax, New Jersey residents who

work in New York pay income taxes to New York which

* Compare 1978 N.J. Sess. Laws, Ch. 131, with New York Tax

Law § 602 (McKinney, 1978) and 1978 N.Y. Sess. Laws, Ch. 70.

necessarily equal in amount the Commuter Income Tax;

they therefore receive a full credit and pay no Commuter

Income Tax to New Jersey.

No New Jersey resident has ever paid a penny under

this tax. Indeed, New Jersey residents have been ex-

empted from filing returns for the Commuter Income

Tax. 54 N.J. Stat. Ann. § 8A-19(b) (West) (Supp. 1979) ;

1 N.J. Tax Reporter (CCH) § 18-301, 305.

Significant to the analysis required by Austin v. New

Hampshire, 420 U.S. 656 (1975), New Jersey does not im-

pose any tax which is payable by New Jersey citizens

alone—all of New Jersey’s other taxes are imposed upon

residents and nonresidents alike.

The purported justification for the Commuter Income

Tax is the burden that nonresident commuters allegedly

place upon New Jersey’s transportation facilities, and

the proceeds of the tax assertedly are kept in a special

fund for transportation projects. 54 N.J. Stat. Ann. § 8A-

20-23 (West) (Supp. 1979). However, transfers from that

fund may be and have been made regularly to the State’s

General Fund and to the Property Tax Relief Fund. See

54 N.J. Stat. Ann. § 8A-121 (West) (Supp. 1979).*

Moreover, Governor Meyner, in his original message to

the New Jersey legislature, stated that the intent of the

statute was to take advantage of tax credits granted by

New York State’s income tax scheme and divert tax reve-

nues from New York. See, Day, Taxing Interstate Com-

muters: A New Jersey Experiment Under The United

States Constitution, 18 Rutgers L. Rev. 1, 2 (1963).

* Annually since 1976, the proceeds of the tax have been kept sepa-

rate, pending the outcome of this challenge to the tax, and have been

disbursed only at the end of each fiscal year.

And finally, imposition of the tax is not limited to New

Yorkers who actually commute to New Jersey; rather, the

tax is levied on all income derived by New Yorkers from

New Jersey, including rents and capital gains, whether

or not the New York resident ever sets foot in New Jer-

sey.*

Appellants filed this action in June 1977 in the Superior

Court of New Jersey, Chancery Division. Appellants

moved for summary disposition of the case, arguing that

the tax was plainly unconstitutional in light of Austin.

Appellee submitted voluminous evidence regarding the al-

leged transportation burden imposed by New York State

residents and the alleged benefits they receive from New

Jersey, and cross-moved for a declaration that the tax was

constitutional. On October 24, 1978, the Superior Court

denied appellants’ motion and granted appellee's cross-

motion for summary judgment. Appendix B, p. 39a.

The Supreme Court of New Jersey thereafter granted

appellants’ motion to hear a direct appeal from the Su-

perior Court judgment. On March 26, 1980, the New Jer-

sey Supreme Court ruled that the tax was constitutional

under the Equal Protection Clause. Appendix A, pp. 3la-

35a.

However, with respect to appellants’ claims under the

Privileges and Immunities Clause, the court remanded

for a further hearing, Appendix A, pp. 20a-27a, to de-

termine (1) whether nonresidents constituted the “pe-

culiar source” of the transportation problem advanced by

New Jersey as the justification for the tax—even though

it is undisputed that many more New Jerseyites than New

* On the other hand, the tax is not levied on Connecticut resi-

dents, many of whom use the very same interstate transportation

facilities as New Yorkers to commute to New Jersey.

Yorkers commute across the New York-New Jersey bor-

der daily; and (2) whether the discrimination practiced

against nonresidents bears a “substantial relationship” to

their contribution to that transportation problem—even

though appellee himself testified that the rate of tax has

never been based on any analysis of transportation prob-

lems but was geared solely to the New York income tax

rates. (Deposition of Sidney Glaser, Jan. 12, 1978 at 59.)

I.

The Federal Questions are Substantial

A. There is an urgent need for the Court promptly to en-

force the mandate of Austin v. New Hampshire, 420

U.S. 656 (1975), and to vindicate appellants’ rights

under the Privileges and Immunities Clause.

The decision below should be summarily reversed as

being directly contrary to this Court’s decision in Austin

v. New Hampshire, 420 U.S. 656 (1975). If, after this

Court has unequivocally decided an issue, a plaintiff must

nevertheless spend years in a state-court system re-litigat-

ing that very same issue, then, it is fair to say, this

Court’s very authority is being undermined. Plainly and

simply, the State of New Jersey is defying a straightfor-

ward decree of this Court.

The New Jersey Commuter Income Tax is indistinguish-

able from the discriminatory commuter tax which Austin

held to violate the Privileges and Immunities Clause. In-

deed, New Jersey submitted an amicus brief to the Court

in Austin (on behalf of New Hampshire) which conceded

that the two states’ commuter income tax schemes were

“similar.” See Amicus Curiae Brief of the Attorney Gen-

eral of the State of New Jersey at 3, Austin v. New Hamp-

shire, 420 U.S. 656 (1975). In fact, the two are iden-

tical :

9

—Each commuter income tax is a duplicate of the

income tax imposed by the bordering state;

—Each was designed to, and has the effect of,

taking advantage of tax credits granted by the bor-

dering state in order to divert income tax revenues

from that bordering state;

—Each is nominally imposed on residents and

nonresidents, but, by means of credits or exemp-

tions, in fact is imposed only on nonresidents;

—FEach taxing state requires employers to with-

hold portions of the nonresidents’ income for pay-

ment of the commuter income tax;

—Each commuter income tax “falls exclusively

on the income of nonresidents; and it is not offset,

even approximately, by other taxes imposed upon

residents alone.”* Austin v. New Hampshire, 420

U.S. at 665.

New Jersey has managed to stave off compliance with

Austin, first, by engaging in dilatory motion practice in

the understandably indulgent New Jersey state courts.**

*In this and other respects, the New Jersey Commuter Income

Tax is worse han the New Hampshire tax invalidated in Aus-

tin. New Hampshire residents did pay some taxes to which non-

residents were not subjected. See Austin v. New Hampshire, 420

U.S. at 659 n. 3. Moreover, the maximum rate paid by nonresidents

was 4%. New Jersey residents unti! 1976 paid no taxes to which

similarly situated New York residents were not also subjected, and

since 1976 have paid a maximum of 2.5% under the New Jersey

Gross Income Tax. The Commuter Income Tax imposed on New

Yorkers has ranged as high as 15%.

** The tax involves some $40 million annually for New Jersey. The

New Jersey trial judge candidly stated on a number of occasions that

he was struggling for a way to uphold the tax, despite Austin. He

said, for example: “[I]f I could find a way to end it or to avoid

Austin, I surely would sustain this tax.” (Transcript of Proceedings,

Feb. 23, 1978 at 16.)

10

Thus, in proceedings to date, the State has 1) moved to

transfer the case from the Chancery Division, even though

appellants sought primarily declaratory and injunctive re-

lief; 2) moved to dismiss the case for failure to exhaust

administrative remedies—in the face of uniform authority

holding that no exhaustion is necessary in a constitutional

challenge to a statute; 3) moved to dismiss for failure to

join New York State as a “real-party-in-interest,” even

though New Jersey previously had argued—and this Court

had held—that New York had no standing ;* and 4) moved

to dismiss on the ground that plaintiffs lacked standing—

on precisely the same argument raised and squarely re-

jected in Austin vy. New Hampshire, 420 U.S. at 659-60

n. 4.

While the New Jersey courts ultimately dismissed each

of these frivolous arguments (some of which were deemed -

“surprising” by the Superior Court Judge in light of the

overwhelming contrary authority), these and other delay-

ing actions by New Jersey have had the effect of dragging

out the litigation, now three years old.

The remand ordered by the New Jersey Supreme Court

would create much more delay.** But each day that the

Commuter Income Tax remains in effect not only repre-

*New York v. New Jersey, 429 U.S. 810 (1976). New Jersey

argued to this Court that “the Privileges and Immunities clause . . .

only may be invoked by individual citizens and not by states.” Brief

of Attorney General of New Jersey in Opposition to Motion for

Leave to File Original Action at 7, Pennsylvania v. New Jersey, 426

U.S. 660 (1976).

** The Attorney General of the State of New Jersey has already

informed the lower court that he will move to stay all proceedings

on remand pending the resolution of this appeal. He has also stated

that if this Court declines to hear the case at this stage, he will seek

many months from the date of that decision to prepare for a one or

two day trial.

11

sents a violation of appellants’ rights and a victory for

New Jersey, but a continuing and conspicuous failure to

give effect to an unambiguous decision of this Court.

New Jersey continues to collect the unconstitutional tax,

amounting to some $40 million annually, hopeful, per-

haps, that statutes of limitation, and complex adminis-

trative processes, will render the ordering of refunds un-

likely.*

The second means by which New Jersey has avoided

compliance with Austin is by advancing a distinction be-

tween this case and Austin, and a justification for the

tax, which is, with all due respect, a sham. The “trans-

portation” justification alleged to distinguish this case

from Austin must be meaningless as a matter of law.

By definition, a nonresident who works in a neighbor-

ing state and thereby earns income can do so only by

transporting himself there. This interstate commutation

necessarily will impose some cost or “burden” upon the

transportation facilities of the taxing state. Austin neces-

sarily presented precisely the same problem, and there-

fore must be read to hold that the “transportation prob-

lem” created by the mere movement of residents of one

state to work in a neighboring state cannot serve as a

legitimate justification for a discriminatory tax. Other-

wise, Austin would be a nullity.

The asserted “transportation” justification for the tax

is also frivolous as a matter of fact. And thus no

conceivable fact-finding on remand could justify the

tax. It is undisputed that the number of New Jer-

sey residents who commute to New York exceeds the num-

ber of New York residents who commute to New Jersey

* New Jersey undoubtedly draws solace from the fact, of which

we are advised, that five years after the Austin decision, Maine resi-

dents litigating in the New Hampshire courts have not yet succeeded

in obtaining refunds.

12

by a factor of at least two or three to one (Appendix A,

p. 22a). Hundreds of thousands of other interstate travel-

ers use the same facilities on a daily basis. Based on

these undisputed facts alone, appellee cannot rationally

demonstrate that New Yorlers constitute the “peculiar

source” of the alleged protlem. See Toomer vy. Wit-

sell, 384 U.S. 385, 398 (1948); Hicklin v. Orbeck, 437

U.S. 518, 526-27. Even if app-'lee could somehow pass

that threshold, the requisite “substantial relationship”

between the burdens imposed by nonresidents and the

discrimination practiced against them could not possibly

be demonstrated. See Toomer v. Witsell, 334 U.S. at 398-99,

Appellee conceded that the tax never even purported to

be based on an analysis of any transportation burden

created by New Yorkers. It was avowedly designed to

be, and is, simply a device to divert New York State in-

come tax revenues to New Jersey. Indeed, as originally

enacted in 1961, the tax did not fall on New York residents

at all; it was in 1962, when New York changed its system

of credits, that New Jersey retroactively amended the New

Jersey Commuter Income Tax to apply only to New York-

ers (Appendix A, pp. lla, 13a). Further, as noted above,

non-commuting New Yorkers, who impose no alleged

“transportation burden,” are subject to the tax. And,

as the New Jersey Supreme Court acknowledged, to the

extent the tax proceeds have been used for transporta-

tion projects, they have been used to fund intra-state rail

and bus facilities utilized almost exclusively by New Jersey

residents (Appendix A, p. 23a).

In short, the “transportation” distinction is a make-

weight only. It cannot, on the undisputed facts, be shown

to have any real “relationship” to this tax. More im-

portant, it is not a distinction at all, since precisely the

same statutory structure, and a completely parallel set

of facts (by the very definition of “commutation”), were

present in Austin.

13

As was made clear in Austin, the interests at stake here

are not mere economic interests. The decisions below

have had, and will continue to have until overturned, a

substantial harmful effect on the right of appellants, and

thousands like them, to travel and to pursue their occupa-

tions in a neighboring state free from discriminatory

treatment and on the structural integrity of the federal

system. See Austin v. New Hampshire, 420 U.S. at 662.

If New Jersey’s continued defiance of Austin is toler-

ated, other states will be encouraged to enact discrimina-

tory commuter income taxes of the type struck down in

Austin, and to seek to insulate those taxes from legal

attack merely by dubbing them “transportation taxes.”

These may be followed by retaliatory taxes, which, as

noted in Austin, would further disrupt interstate relations.

B. the New Jersey Commuter Income Tax violates appel-

lants’ rights under the Equal Protection Clause.

By singling out New York residents who derive income

from New Jersey for discriminatory treatment, the New

Jersey Commuter Income Tax also violates the Equal

Protection Clause of the Fourteenth Amendment to the

United States Constitution.

The tax cannot withstand scrutiny under the lenient stand-

ard of review applied by the New Jersey Supreme Court,

.€., the rational basis test. Austin holds that the goal of

diverting income tax revenues from a sister state is not

a legitimate state interest which can justify discrimina-

tion. And the hostile and oppressive discrimination

against the nonresidents who commute to New Jersey

bears no rational relationship to the statute’s asserted

objective of alleviating interstate transportation burdens.

14

Surely a “rational basis” test cannot be satisfied by

the remote possibility that, by sheerest accident, a stat-

ute actually designed to accomplish an impermissible pur-

pose will happen to relate to a legitimate state inter-

est. Surely no “rational basis” test is met when New

Jersey imposes a tax not designed to relate to trans-

portation problems, but rather geared only to diverting

income tax revenues from New York. Surely the test is

not met when the tax rate is based on the New York In-

come Tax rates and not on any analysis of the alleged

transportation problems; when non-commuters who never

use the transportation facilities are also subject to the tax;

and when Connecticut residents who do use the same

facilities are not taxed. Cf. Califano v. Goldfarb, 430 U.S.

199, 223 (1977) (Stevens, J., coneurring) (“[S]jomething

more than accident is necessary to justify the disparate

treatment .. .”).

Moreover, the New Jersey Supreme Court erred in hold-

ing that the tax could be assessed under the “rational rela-

tion” standard, indeed with the additional latitude accorded

states in the area of taxation. Appendix A, pp. 33a-34a.

That determination sweeps aside the plainly fundamental

rights at stake here.

The New Jersey Commuter Income Tax clearly affects,

and burdens, specifie interests that are undeniably “funda-

mental” in character. By taxing nonresidents more oner-

ously than it taxes its own residents, New Jersey imposes

a burden upon a citizen’s right to travel interstate and to

establish his abode in the state of his choice. A citizen

who works, or wishes to work, in the State of New Jersey,

but who desires to reside in the State of New York is

simply penalized for his choice of state residence. Thus,

not only is the right to travel implicated, but also the

right to travel for purposes of employment. JZicklin vy.

15

Orbeck, 4837 U.S. 518 (1978); Shapiro v. Thompson, 394

U.S. 618 (1969); Ward v. Maryland, 79 U.S. (12 Wall.)

418, 480 (1870).

Il.

The Judgment Below Is ‘Final’? Under Cox Broadcast-

ing Corp. v. Cohn, 420 U.S. 469 (1975).

This case falls within at least two of the categories of

cases in which the Court has found finality even though

further state-court proceedings have been ordered. Coa

Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975). See

generally Note, The Finality Rule for Supreme Court Re-

view of State Court Orders, 91 Harv. L. Rev. 1004 (1978).

First, the case involves important federal rights which

require immediate vindication, and a failure immediately

to review this case would seriously erode federal policy.

Cox Broadcasting Corp. v. Cohn, 420 U.S. at 482-83. The

New Jersey Supreme Court denied appellants’ Equal Pro-

tection claim outright and set forth a standard of review

under the Privileges and Immunities Clause to govern

the “accounting” of benefits and burdens it ordered on

remand—a standard which violates the Court’s mandate

in Austin. Hence the New Jersey Supreme Court has

finally determined, albeit erroneously, both of the disposi-

tive federal issues for purposes of subsequent state liti-

gation.

Reversal of the state court on the federal issue would

preclude any further litigation of this case, since appel-

lants’ position is that the tax is unconstitutional on its

face in light of Austin. On the other hand, failure im-

mediately to review the state court decision will seriously

erode important federal policies by allowing New Jersey

to continue to deny residents of New York their rights

16

under the Privileges and Immunities and Equal Protec-

tion Clauses, and to continue to flout the Court’s clear

mandate in Austin. Cox Broadcasting Corp. v. Cohn, 420

U.S. at 482-83.

The very act of remanding the case for further state-

court proceedings offends appellants’ constitutional rights.

Here, as in Coa Broadcasting, if the state “court errone-

ously upheld the statute, there should be no trial at all.”

Cox Broadcasting Corp. v. Cohn, 420 U.S. at 485. See also

New York vy. Cathedral Academy, 434 U.S. 125, at 128 n.4

(1977).

Indeed, the proceedings on remand, like those in Mills

vy. Alabama, 384 U.S. 214, 217-18 (1966), will constitute

a patent waste of time and energy. Under Austin, the New

Jersey statute is unconstitutional on its face. Moreover,

as noted above (supra, pp. 11-12) no rational fact-finding

process could possibly show that New Yorkers are the

“peculiar source” of the alleged transportation problem

or that there is a “substantial relationship” between the

tax and New Yorkers’ alleged contribution to that prob-

lem.*

The very delay occasioned by the remand violates ap-

pellants’ rights, The case was instituted three years ago.

* That the New Jersey Supreme Court chose to remand for fur-

ther evidence on these issues notwithstanding their apparent sim-

plicity leaves appellants less than assured that they will prevail on

remand, particularly since the same issues arose and should have

been dispositive in the prior proceedings. Moreover, the New Jer-

sey court apparently has injected an additional factor into the “ac-

counting” to take place below, i.¢., the amount of taxes such as the

property tax which are paid by residents and nonresidents alike.

Appendix A, pp. 24a-25a. In Austin v. New Hampshire, 420 U.S. at

659 n.3, this Court specifically stated that such taxes are irrelevant to

the Privileges and Immunities inquiry.

17

If the decision below is not immediately reversed, it may

well take several additional years to get the dispositive

constitutional questions finally determined. See Mills v.

Alabama, 384 U.S. at 218 n.4. Subjecting appellants to

lengthy further proceedings in the state courts will result

in irreparable injury to fundamental rights.

That the rights here involved are fundamental was es-

tablished in Austin v. New Hampshire, 420 U.S. at 662:

“The Privileges and Immunities Clause, by making

noncitizenship or nonresidence an improper basis

for locating a special burden, implicates not only

the individual’s right to nondiscriminatory treat-

ment but also, perhaps more so, the structural

balance essential to the concept of federalism.”

Certainly these rights, together with the right to travel

—a right partly grounded in the First Amendment—

and the right to practice one’s occupation in a neighbor-

ing state free from discriminatory restrictions, which also

are implicated here, are as precious as the rights involved

in other cases where the Court has found jurisdiction

because delay in vindication of the right is itself intoler-

able. See Hicklin v. Orbeck, 487 U.S. at 524-26 (1978). See

also Cox Broadcasting Corp. v. Cohn, 420 U.S. at 485 n.12;

National Socialist Party of America v. Village of Skokie,

432 U.S. 43, 44 (1977); Nebraska Press Association v.

Stuart, 423 U.S. 1327, 13829 (1975) (Blackmun, J., in

chambers) (“. . . [E]Jach passing day may constitute a

separate and cognizable infringement. ... In this sense

delay itself is a final decision”) ; Miami Herald Publishing

Co. v. Tornillo, 418 U.S. 241, 247 n.6 (1974); Mercantile

National Bank y. Langdeau, 371 U.S. 555, 558 (1963);

Local No. 438 Construction and General Laborers’ Union

v. Curry, 371 U.S. 542, 548-52 (1963).

18

Second, and alternatively, the judgment below is “final”

because this case may be viewed as one in which the dis-

positive federal issue will survive and require decision

by this Court regardless of the outcome of future state-

court proceedings, Cox Broadcasting Corp. v. Cohn, 420

U.S. at 480. That determination may be based on the prag-

matic circumstanees of the case. See American Export

Lines v. Alvez, 48 U.S.L.W. 4501, 4502-03 (1980). See

also Note, The Finality Rule for Supreme Court Review

of State Court Orders, 91 Harv. L. Rev. 1004, 1019-20, n.

89 (1978). Cf. Gillespie v. United States Steel Corp.,

379 U.S. 148, 152-54 (1964); Redish, The Pragmatic Ap-

proach to Appealability in the Federal Courts, 75 Colum.

L. Rev. 89 (1975) (appeals under 28 U.S.C. § 1291).

Appellants’ argument that the tax is invalid on its face

in light of Austin has been finally rejected by the New

Jersey Supreme Court, but it will undoubtedly be pre-

sented to this Court later if review is not obtained now,

no matter what the outcome of the “accounting” ordered

by the New Jersey Court. If appellants do not prevail

on remand, they will return to this Court on appeal or

with a writ of certiorari. On the other hand, if appel-

lants do prevail on remand, they will still raise the issue

in response to appellee’s inevitable petition for certiorari

in this ease which involves some $40 million of tax reve-

nues yearly.

Thus, “[{nJothing that could happen in the course of

the accounting, short of settlement of the case, would fore-

close or make unnecessary decision on the federal ques-

tion.” Cox Broadcasting Corp. v. Cohn, 420 U.S. at 480.

In this sense, the case resembles other cases the Court

has reviewed when the proceedings contemplated on

remand will not eliminate the federal issue. See, e.g.,

American Export Lines v. Alvez, 48 U.S.L.W. 4501 (1980) ;

New York v. Cathedral Academy, 434 U.S. at 128 n.4

19

(1977); Brady v. Maryland, 373 U.S. 83 (1963); Radio

Station WOW, Inc. v. Johnson, 326 U.S. 120 (1945);

Carondelet Canal & Navigation Co. v. Louisiana, 233 U.S.

362 (1914); Forgay v. Conrad, 47 U.S. (6 How.) 201

(1848).

In short, the judgment below is “final” within the mean-

ing of 28 U.S.C. § 1257.

For the reasons stated, the judgment below also meets

the specific requisite of 28 U.S.C. § 1257(2), conferring

appellate jurisdiction. With respect to appellants’ claim

under the Equal Protection Clause, the decision of the

New Jersey Supreme Court is, by its express terms, “in

favor of [the] validity” of the New Jersey Commuter

Income Tax. 28 U.S.C. § 1257(2). As to appellants’ Privi-

leges and Immunities Clause claim, the New Jersey court’s

decision is, in practical effect, a decision “in favor of its

validity”; the tax is still being imposed.

(Should this Court not agree that the judgment ap-

pealed from meets the requirements of 28 U.S.C. § 1257

(2), we respectfully request that the Court treat this Juris-

dictional Statement as a petition for certiorari under 28

U.S.C. § 1257(3)).

CONCLUSION

This case, we submit, presents a classic occasion for

summary reversal: the plain disregard of a prior deci-

sion of this Court. The Court should summarily reverse

the decision below, with instructions to declare the New

Jersey Commuter Income Tax unconstitutional in light

of Austin v. New Hampshire.

Respectfully submitted,

Max Girrer

Aprian M. Fotey, Jr.

Of Counsel: Counsel for Appellants

Kevin J. CoaKLey

Mark C. Morrit

Suzanne L. Stone

June 23, 1980